Strong Health Systems for All: Better Public Spending for Better Outcomes
SUBJECT: Polity & Governance
Context
Strengthening public health systems requires not only higher public spending but also efficient utilisation of available resources. In many Low- and Middle-Income Countries (LMICs), limited fiscal capacity, declining international aid, and rising debt have made efficient governance of health expenditure more important than ever.
Global Scenario
Inadequate Public Health Financing
- LMICs currently spend only about half of the minimum benchmark required to achieve Universal Health Coverage (UHC).
- Although the health expenditure gap as a percentage of GDP has narrowed since 2000, the per capita spending gap has increased more than three-fold.
- This indicates that health investments have not kept pace with economic growth and rising healthcare needs.
Emerging Fiscal Challenges
1. Declining Development Assistance for Health (DAH)
Development Assistance for Health (DAH), which traditionally supplemented domestic health budgets, has witnessed a sharp decline after the COVID-19 pandemic.
Major aid reductions in 2025:
- United States: 67%
- United Kingdom: 39%
- France: 35%
- Germany: 12%
According to the OECD, global health aid may decline by nearly 60% from its 2022 peak.
2. Rising Public Debt
- Global public debt reached $102 trillion in 2024.
- Developing countries accounted for $31 trillion of this debt.
- They paid a record $921 billion in interest payments, significantly reducing fiscal space for health and social sector spending.
Implication: Large increases in health expenditure are unlikely in the near future. Therefore, governments must focus on:
- Efficient utilisation of existing resources
- Better prioritisation
- Strong governance
Three Key Reforms Needed
1. Improve Health Budget Utilisation
Merely allocating funds is insufficient; effective utilisation is equally important.
Global Situation
- Health budget execution in LMICs averages only 85–90%, lower than sectors such as education.
- This reflects the de-prioritisation of health during budget implementation.
India’s Experience
According to the Department-related Parliamentary Standing Committee on Health and Family Welfare (2025):
- Only around two-thirds of the allocation under PM Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) was utilised during 2024–25.
- Under the National Health Mission (NHM), only 26% of funds earmarked for communicable and non-communicable disease programmes were spent.
Way Forward
- Timely release of funds
- Better monitoring of expenditure
- Strengthening implementation capacity
- Reducing administrative delays
2. Prioritise the Right Areas of Healthcare
Current public expenditure is skewed towards secondary and tertiary curative care, while preventive and primary healthcare remain underfunded.
Current Situation
- Salary expenditures are generally utilised efficiently.
- However, spending on:
- Medicines
- Medical equipment
- Diagnostics
- Essential healthcare services
remains inadequate, reducing the effectiveness of healthcare workers.
India’s Concern
India spends less than one-fourth of its public health expenditure on preventive healthcare.
Priority Areas
Greater investment is required in public health goods, including:
- Vaccination
- Disease surveillance
- Sanitation
- Infectious disease control
- Health promotion
These sectors experience market failure, making government intervention indispensable.
Evidence
Research shows that public spending significantly improves:
- Immunisation coverage
- Infectious disease control
- Access to healthcare
- Sanitation outcomes
However, improvements in:
- Maternal health
- Non-communicable diseases (NCDs)
remain limited unless spending is strategically targeted.
Future Focus
With India’s ageing population, greater emphasis should be placed on:
- Risk-factor reduction
- Early diagnosis
- Preventive screening
- Chronic disease management
3. Strengthen Governance and Operational Efficiency
Higher expenditure alone cannot improve health outcomes unless accompanied by sound governance.
Why Governance Matters
Effective governance enhances:
- Efficiency of public expenditure
- Service delivery
- Accountability
- Health outcomes, including reduced child mortality
As health services become increasingly decentralised, governance reforms at the State and local government levels become critical.
Strengthening Public Financial Management (PFM)
A robust Public Financial Management system should ensure:
- Credible and realistic budgeting
- Timely release of funds
- Efficient procurement systems
- Flexible financial management
- Outcome-based monitoring
Empower Frontline Health Workers
Involving frontline healthcare providers in budgeting and planning:
- Improves accountability
- Enhances motivation
- Ensures better resource utilisation
- Aligns spending with local health needs
Conclusion
While increasing public investment in health remains essential, better governance, strategic prioritisation, and efficient utilisation of available resources offer the greatest opportunity to strengthen public health systems.
A health system that is well-funded, efficiently governed, prevention-oriented, and outcome-driven is crucial for achieving Universal Health Coverage (UHC) and reducing health inequalities, particularly in resource-constrained countries like India.
Mains Question
“In the present fiscal environment, improving governance and efficiency of public health expenditure is more important than merely increasing allocations.” Discuss. (250 Words)
